Chubb Limited (CB) 10-Q 7 Aug 09 2009 Q2 Quarterly report Financial data

Consolidated Balance Sheets

Consolidated Balance Sheets (USD $)
In Millions	Jun. 30, 2009	Dec. 31, 2008
Investments:
Fixed maturities available for sale, at fair value (amortized cost - $36,810 and $33,109) (includes hybrid financial instruments of $309 and $239)	$35,697	$31,155
Fixed maturities held to maturity, at amortized cost (fair value - $3,535 and $2,865)	3,517	2,860
Equity securities, at fair value (cost - $546 and $1,132)	423	988
Short-term investments, at fair value and amortized cost	2,081	3,350
Other investments (cost - $1,320 and $1,368)	1,363	1,362
Total investments	43,081	39,715
Cash	654	867
Securities lending collateral	1,370	1,230
Accrued investment income	478	443
Insurance and reinsurance balances receivable	4,016	3,453
Reinsurance recoverable on losses and loss expenses	13,430	13,917
Reinsurance recoverable on future policy benefits	348	259
Deferred policy acquisition costs	1,376	1,214
Value of business acquired	793	823
Prepaid reinsurance premiums	1,911	1,539
Goodwill and other intangible assets	3,756	3,747
Deferred tax assets	1,579	1,835
Investments in partially-owned insurance companies (cost - $373 and $737)	462	832
Other assets	2,401	2,183
Total assets	75,655	72,057
Liabilities
Unpaid losses and loss expenses	37,268	37,176
Unearned premiums	6,725	5,950
Future policy benefits	2,984	2,904
Insurance and reinsurance balances payable	3,075	2,841
Deposit liabilities	314	345
Securities lending payable	1,427	1,296
Payable for securities purchased	1,082	740
Accounts payable, accrued expenses, and other liabilities	2,257	2,635
Income taxes payable	115	138
Short-term debt	216	471
Long-term debt	3,322	2,806
Trust preferred securities	309	309
Total liabilities	59,094	57,611
Shareholders' equity:
Common Shares (CHF 32.51 and CHF 33.14 par value, 337,565,874 and 335,413,501 shares issued, 336,097,451 and 333,645,471 shares outstanding disclosed)	10,704	10,827
Common Shares in treasury [N] (1,468,423 and 1,768,030 shares)	(2)	(3)
Additional paid-in capital	5,453	5,464
Retained earnings	1,397	74
Deferred compensation obligation [N]	3	3
Accumulated other comprehensive income (loss)	(991)	(1,916)
Common shares issued to employee trust [N]	(3)	(3)
Total shareholders' equity	16,561	14,446
Total liabilities and shareholders' equity	$75,655	$72,057

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parentheticals) (USD $)
In Millions, except Share data	Jun. 30, 2009	Dec. 31, 2008
Consolidated balance sheets- assets - parenthetical disclosures
Fixed maturities available for sale, at amortized cost	$36,810	$33,109
Fixed maturities available for sale, hybrid financial instruments	309	239
Fixed maturities held to maturity, at fair value	3,535	2,865
Equity securities, at cost	546	1,132
Other investments, at cost	1,320	1,368
Investments in partially-owned insurance companies, at cost	$373	$737
Consolidated balance sheets - equity - parenthetical disclosures
Common Shares - shares issued	337,565,874	335,413,501
Common Shares - shares outstanding	336,097,451	333,645,471
Common Shares in treasury - shares	1,468,423	1,768,030

1_Consolidated Balance Sheets (

Consolidated Balance Sheets (Parentheticals in CHF) (Common shares par value, CHF )
	Jun. 30, 2009	Dec. 31, 2008
Common share par value in CHF
Common shares - par value	32.51	33.14

Consolidated Statements of Oper

Consolidated Statements of Operations and Comprehensive Income (USD $)
In Millions	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Revenue:
Gross premiums written	$5,117	$5,293	$9,652	$9,702
Reinsurance premiums ceded [N]	(1,702)	(1,695)	(2,813)	(2,950)
Net premiums written	3,415	3,598	6,839	6,752
Change in unearned premiums [N]	(149)	(170)	(379)	(384)
Net premiums earned	3,266	3,428	6,460	6,368
Net investment income	506	532	1,008	1,021
Net realized gains (losses):
Other-than-temporary impairment (OTTI) losses, gross [N]	(305)	(210)	(497)	(399)
Portion of OTTI losses recognized in other comprehensive income	191	0	191	0
Net OTTI losses recognized in income	(114)	(210)	(306)	(399)
Net realized gains (losses) excluding OTTI losses	(111)	84	(40)	(80)
Net realized gains (losses)	(225)	(126)	(346)	(479)
Total revenues	3,547	3,834	7,122	6,910
Expenses:
Losses and loss expenses	1,821	1,895	3,637	3,474
Policy benefits	78	89	177	152
Policy acquisition costs	523	569	1,004	1,037
Administrative expenses	454	461	874	836
Interest expense	56	62	109	108
Other (income) expense [N]	(21)	(125)	(7)	(110)
Total expenses	2,911	2,951	5,794	5,497
Net income before tax	636	883	1,328	1,413
Income tax expense	101	137	226	290
Net income	535	746	1,102	1,123
Other comprehensive income (loss):
Unrealized (depreciation) appreciation	972	(731)	526	(1,228)
Reclassification adjustment for net realized (gains) losses included in net income [N]	157	169	336	342
Subtotal	1,129	(562)	862	(886)
Cumulative translation adjustments	325	6	267	33
Pension liability [N]	(10)	1	(14)	1
Other comprehensive income (loss), before income tax	1,444	(555)	1,115	(852)
Income tax (expense) benefit related to other comprehensive income items [N]	(289)	27	(190)	35
Other comprehensive income (loss)	1,155	(528)	925	(817)
Comprehensive income (loss)	$1,690	$218	$2,027	$306
Earnings per share:
Basic earnings per share	1.58	2.2	3.28	3.31
Diluted earnings per share	1.58	2.18	3.27	3.29

Consolidated Statements of Shar

Consolidated Statements of Shareholders' Equity (USD $)
In Millions	Preferred stock	Common stock	Treasury stock	Additional paid-in capital	Retained earnings	Deferred compensation, share-based payments	Accumulated net unrealized investment gain (loss)	Accumulated translation adjustment	Accumulated defined benefit plan adjustment	Accumulated income tax (expense) benefit	Common stock issued to employee trust	Total
Shareholders' equity - beginning of period at Dec. 31, 2007	$2	$14	$0	$6,812	$9,080	$3	$596	$231	($58)	$0
Effect of partial adoption of FAS 157					(4)		0
Effect of adoption of FAS 159					6		(6)
Balance - beginning of period, adjusted for effect of adoption of new accounting principle					9,082		590
Preferred Shares redeemed	(2)			(573)
Effect of adoption of FSP FAS 115-2 and FAS 124-2					0		0
Net shares issued under employee-based compensation plans		0		(13)
Exercise of stock options		0		80
Dividends declared on Common Shares - par value reduction		0
Common shares issued in treasury, net of net shares redeemed under employee-based compensation plans			0
Share-based compensation expense (APIC)				66
Net income					1,123							1,123
Dividends declared on Common Shares [N]				925	(186)
Dividends declared on Preferred Shares [N]					(24)
Common Shares stock dividend		10,920			(9,995)
Accumulated other comprehensive income (loss):
Change in net unrealized appreciation (depreciation) on investments (AOCI), net of tax (expense) benefit of $(201) and $52							(834)			52
Other-than-temporary impairments - fixed maturities HTM							0
Other-than-temporary impairments - fixed maturities AFS							0
Change in cumulative translation adjustment (AOCI), net of tax (expense) benefit of $(76) and $(17)								16		(17)
Change in pension liability adjustment (AOCI), net of tax (expense) benefit of $5 and $nil									1	0
Shareholders' equity - end of period at Jun. 30, 2008	0	10,934	0	5,447	0	3	(244)	247	(57)	0	(3)
Shareholders' equity - beginning of period at Mar. 31, 2008						3					(3)
Accumulated other comprehensive income (loss):
Shareholders' equity - end of period at Jun. 30, 2008						3					(3)
Shareholders' equity - beginning of period at Dec. 31, 2008	0	10,827	(3)	5,464	74	3	(1,712)	(161)	(43)	0		14,446
Effect of partial adoption of FAS 157					0		0
Effect of adoption of FAS 159					0		0
Balance - beginning of period, adjusted for effect of adoption of new accounting principle					74		(1,712)
Preferred Shares redeemed	0			0
Effect of adoption of FSP FAS 115-2 and FAS 124-2					221		(267)
Net shares issued under employee-based compensation plans		68		(72)
Exercise of stock options		1		2
Dividends declared on Common Shares - par value reduction		(192)
Common shares issued in treasury, net of net shares redeemed under employee-based compensation plans			1
Share-based compensation expense (APIC)				59
Net income					1,102							1,102
Dividends declared on Common Shares [N]				0	0
Dividends declared on Preferred Shares [N]					0
Common Shares stock dividend		0			0
Accumulated other comprehensive income (loss):
Change in net unrealized appreciation (depreciation) on investments (AOCI), net of tax (expense) benefit of $(201) and $52							1,010			(201)
Other-than-temporary impairments - fixed maturities HTM							0
Other-than-temporary impairments - fixed maturities AFS							0
Change in cumulative translation adjustment (AOCI), net of tax (expense) benefit of $(76) and $(17)								191		(76)
Change in pension liability adjustment (AOCI), net of tax (expense) benefit of $5 and $nil									(9)	5
Shareholders' equity - end of period at Jun. 30, 2009	0	10,704	(2)	5,453	1,397	3	(969)	30	(52)	0	(3)	16,561
Shareholders' equity - beginning of period at Mar. 31, 2009						3					(3)
Accumulated other comprehensive income (loss):
Shareholders' equity - end of period at Jun. 30, 2009						$3					($3)

Consolidated Statement of Cash

Consolidated Statement of Cash Flows (USD $)
In Millions	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Cash flows from operating activities:
Net income	$1,102	$1,123
Adjustments to reconcile net income to net cash flows from operating activities
Net realized (gains) losses [N]	346	479
Amortization of premium/discount on fixed maturities	14	5
Deferred income taxes [N]	(68)	12
Unpaid losses and loss expenses (cash flow) [N]	(135)	(6)
Unearned premiums (cash flow)	772	671
Future policy benefits (cash flow)	97	52
Insurance and reinsurance balances payable (cash flow)	238	55
Accounts payable, accrued expenses, and other liabilities (cash flow)	(360)	74
Income taxes payable (cash flow)	17	(42)
Insurance and reinsurance balances receivable (cash flow)	(484)	(472)
Reinsurance recoverable on losses and loss expenses (cash flow)	626	641
Reinsurance recoverable on future policy benefits (cash flow)	(124)	(24)
Deferred policy acquisition costs (cash flow) [N]	(195)	(158)
Prepaid reinsurance premiums (cash flow) [N]	(361)	(297)
Other cash flows from operating activities [N]	(163)	(31)
Net cash flows from operating activities	1,322	2,082
Cash flows used for investing activities:
Purchases of fixed maturities available for sale [N]	(17,920)	(10,050)
Purchases of to be announced mortgage-backed securities [N]	(5,264)	(13,289)
Purchases of fixed maturities held to maturity [N]	(184)	(216)
Purchases of equity securities [N]	(309)	(588)
Sales of fixed maturities available for sale	13,610	9,788
Sales of to be announced mortgage-backed securities	5,621	11,538
Sales of fixed maturities held to maturity	1	0
Sales of equity securities	1,074	724
Maturities and redemptions of fixed maturities available for sale	1,627	1,628
Maturities and redemptions of fixed maturities held to maturity	220	262
Net proceeds from (payments made on) the settlement of investment derivatives [N]	5	(22)
Acquisition of subsidiary (net of cash acquired of $19)	0	2,557
Other [N]	(96)	(422)
Net cash flows used for investing activities	(1,615)	(3,204)
Cash flows (used for) from financing activities:
Dividends paid on Common Shares [N]	(179)	(178)
Proceeds from exercise of options for Common Shares	3	80
Proceeds from Common Shares issued under ESPP	11	10
Dividends paid on Preferred Shares [N]	0	(24)
Net (repayment of) proceeds from short-term debt	(250)	670
Net proceeds from issuance of long-term debt	500	1,195
Redemption of Preferred Shares	0	(575)
Net cash flows (used for) from financing activities	85	1,178
Effect of foreign currency rate changes on cash and cash equivalents:
Effect of foreign currency rate changes on cash and cash equivalents	(5)	16
Cash:
Net (decrease) increase in cash	(213)	72
Cash - beginning of period	867	510
Cash - end of period	$654	$582

Consolidated Statements of Cash

Consolidated Statements of Cash Flows Parenthetical Disclosures (USD $)
In Millions	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Consolidated statements of cash flows parenthetical disclosures
Cash acquired from acquisition of subsidiary	$0	$19

General

General
	6 Months Ended Jun. 30, 2009
Notes to the Consolidated Financial Statements
General	1. GeneralACE Limited (ACE or the Company) is a holding company which, until July 18, 2008, was incorporated with limited liability under the Cayman Islands Companies Law. On March 19, 2008, the Company announced that its Board of Directors (the Board) approved a proposal to move the Companys jurisdiction of incorporation from the Cayman Islands to Zurich, Switzerland (the Continuation). On July 10, 2008, and July 14, 2008, during ACEs annual general meeting, the Companys shareholders approved the Continuation and ACE became a Swiss company effective July 18, 2008. The Company, through its various subsidiaries, provides a broad range of insurance and reinsurance products to insureds worldwide. ACE operates through the following business segments: Insurance North American, Insurance Overseas General, Global Reinsurance, and Life. Refer to Note 10.On April 1, 2008, ACE acquired all outstanding shares of Combined Insurance Company of America (Combined Insurance) and certain of its subsidiaries from Aon Corporation for $2.56 billion. Combined Insurance is a leading underwriter and distributor of specialty individual accident and supplemental health insurance products targeted to middle income consumers and small businesses in North America, Europe, Asia Pacific, and Latin America. ACE recorded the acquisition using the purchase method of accounting. Based on ACEs final purchase price allocation, $882 million of goodwill and $43 million of other intangible assets were generated as a result of the acquisition. Goodwill was apportioned to the Life and Insurance Overseas General segments in the amounts of $750 million and $132 million, respectively. The acquisition also generated $1 billion of value of business acquired (VOBA) which represented the fair value of the future profits of the in-force contracts. VOBA is amortized over a period of approximately 30 years. The interim unaudited consolidated financial statements, which include the accounts of the Company and its subsidiaries, have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and, in the opinion of management, reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of the results and financial position for such periods. All significant intercompany accounts and transactions have been eliminated. Certain items in the prior period financial statements have been reclassified to conform to the current period presentation. The results of operations and cash flows for any interim period are not necessarily indicative of the results for the full year. These financial statements should be read in conjunction with the consolidated financial statements, and related notes thereto, included in the Companys Annual Report on Form 10-K for the year ended December 31, 2008.

Significant accounting policies

Significant accounting policies
	6 Months Ended Jun. 30, 2009
Notes to the Consolidated Financial Statements
Significant accounting policies	2. Significant accounting policiesNew accounting pronouncementsAdopted in the six months ended June 30, 2009Business combinationsIn December 2007, the Financial Accounting Standards Board (FASB) issued Financial Accounting Standard (FAS) No.141 (Revised), Business Combinations (FAS 141R). FAS 141R establishes standards that provide a definition of the acquirer and broaden the application of the acquisition method. FAS 141R also establishes how an acquirer recognizes and measures the assets, liabilities, and any noncontrolling interest in the acquiree recognizes and measures goodwill or a gain from a bargain purchase; and requires disclosures that enable users to evaluate the nature and financial effects of the business combination.FAS 141R shall be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December15, 2008. The adoption of FAS 141R may have a material impact on any future business combinations consummated by the Company, but did not have any effect on previously consummated business acquisitions.In November 2008, the FASB issued Emerging Issues Task Force (EITF) No. 08-7, Accounting for Defensive Intangible Assets (EITF 08-7). EITF 08-7 requires fair value be assigned to acquired defensive intangible assets in accordance with FAS No. 157, Fair Value Measurements (FAS 157), guidance. EITF 08-7 also requires a useful life be assigned to a defensive intangible asset based on the period over which the reporting entity expects a defensive intangible asset to contribute directly or indirectly to future cash flows. EITF 08-7 is effective for intangible assets acquired on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of EITF 08-7 did not have a material impact on the Companys financial condition or results of operations. In April 2009, the FASB issued FASB Staff Position (FSP) No. FAS 141R-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies (FSP FAS 141R-1). FSP FAS 141R-1 amends provisions related to initial recognition and measurement, subsequent measurement, and disclosure of assets and liabilities arising from contingencies acquired in business combinations under FAS 141R. FSP FAS 141R-1 requires acquired contingencies to be recognized at acquisition date fair value if fair value can be reasonably estimated during the allocation period. Otherwise, acquired contingencies would typically be accounted for in accordance with FAS No. 5, Accounting for Contingencies. FSP FAS 141R-1 is effective for all business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of FSP FAS 141R-1 may have a material impact on any future business combinations consummated by the Company, but did not have any effect on previously consummated business acquisitions.Noncontrolling interests In December 2007, the FASB issued FAS No.160, Noncontrolling Interests in Consolidated Financial Statements an Amendment of

Investments

Investments
	6 Months Ended Jun. 30, 2009
Notes to the Consolidated Financial Statements
Investments	3. Investmentsa) Transfers of securitiesAs part of the Companys fixed income diversification strategy, ACE has decided to hold to maturity certain commercial mortgage-backed securities that have shorter term durations. Because the Company has the intent to hold these securities to maturity, a transfer of such securities with a fair value of $704 million was made during the three months ended June 30, 2009, from Fixed maturities available for sale to Fixed maturities held to maturity. The $4 million unrealized depreciation at the date of the transfer continues to be reported as a component of Accumulated other comprehensive income and is being amortized over the remaining life of the securities as an adjustment of yield in a manner consistent with the amortization of any premium or discount. b) Net realized gains (losses)The Company adopted the provisions of FSP FAS 115-2 as of April 1, 2009. Under the provisions of FSP FAS 115-2, when an OTTI related to a fixed maturity security has occurred, ACE is required to record the OTTI in net income if the Company has the intent to sell the security or it is more likely than not that it will be required to sell the security. Further, in cases where the Company does not intend to sell the security and it is more likely than not that it will not be required to sell the security, ACE must evaluate the security to determine the portion of the impairment, if any, related to credit losses. If a credit loss is indicated, an OTTI is considered to have occurred and any portion of the OTTI related to credit losses must be reflected in net income while the portion of OTTI related to all other factors is included in other comprehensive income. For fixed maturities held to maturity, OTTI recognized in other comprehensive income is accreted from accumulated other comprehensive income to the amortized cost of the fixed maturity prospectively over the remaining term of the securities. Prior to the adoption of FSP FAS 115-2, for fixed maturities, ACE was required to record OTTI in net income unless the Company had the intent and ability to hold the impaired security to recovery. FSP FAS 115-2 does not have any impact on the accounting for OTTI for any other type of investment.The cumulative effect of the adoption of FSP FAS 115-2 resulted in a reduction to Accumulated other comprehensive income and an increase to Retained earnings of $267 million as of April 1, 2009. These adjustments reflect the net of tax amount ($349 million pre-tax) of OTTI recognized in net income prior to the adoption related to fixed maturities held at the adoption date that have not suffered a credit loss, the Company does not intend to sell, and it is more likely than not that ACE will not be required to sell before the recovery of their amortized cost. Retained earnings and Deferred tax assets as of April 1, 2009, were also reduced by $46 million as a result of an increase in the Companys valuation allowance against deferred tax assets, which is a direct effect of the adoption of FSP FAS 115-2. Specifically, as a result of the reassessment of credit losses required by the adoption of FSP FAS 115-2, ACE determined that certain previousl

Assumed reinsurance programs in

Assumed reinsurance programs involving minimum benefit guarantees under annuity contracts
	6 Months Ended Jun. 30, 2009
Notes to the Consolidated Financial Statements
Assumed reinsurance programs involving minimum benefit guarantees under annuity contracts	4. Assumed reinsurance programs involving minimum benefit guarantees under annuity contractsThe presentation of income and expenses relating to guaranteed minimum death benefits (GMDB) and guaranteed minimum income benefits (GMIB) reinsurance for the periods indicated, are as follows: Three Months Ended Six Months Ended June 30 June 30 2009 2008 2009 2008 (in millions of U.S. dollars) GMDB Net premiums earned $ 27 $ 32 $ 50 $ 64 Policy benefits $ 21 $ 18 $ 65 $ 47 GMIB Net premiums earned $ 39 $ 38 $ 79 $ 72 Policy benefits $ 6 $ 9 $ 8 $ 15 Realized gains (losses) $ 284 $ 75 $ 283 $ (130) Gain (loss) recognized in income $ 317 $ 104 $ 354 $ (73) Effect of partial adoption of FAS 157 $ - $ - $ - $ 4 Net cash received (disbursed) $ 38 $ 38 $ 78 $ 73 Net (increase) decrease in liability $ 279 $ 66 $ 276 $ (150) At June 30, 2009, reported liabilities for GMDB and GMIB reinsurance were $226 million and $634 million, respectively, compared with $248 million and $910 million, respectively, at December 31, 2008. The reported liability for GMIB reinsurance at June 30, 2009, and December 31, 2008, includes a fair value adjustment of $528 million and $811 million, respectively. Reported liabilities for both GMDB and GMIB reinsurance are determined using internal valuation models. Such valuations require considerable judgment and are subject to significant uncertainty. The valuation of these products is subject to fluctuations arising from, among other factors, changes in interest rates, changes in equity markets, changes in credit markets, changes in the allocation of the investments underlying annuitants account values, and assumptions regarding future policyholder behavior. These models and the related assumptions are continually reviewed by management and enhanced, as appropriate, based upon improvements in modeling assumptions and availability of more timely information, such as market conditions and demographics of in-force annuities.GMDB reinsuranceAt June 30, 2009, and December 31, 2008, the Companys net amount at risk from its GMDB reinsurance programs was $4.4 billion and $4.7 billion, respectively. For GMDB reinsurance programs, the net amount at risk is defined as the present value of future claim payments under the following assumptions: policy account values and guaranteed values are fixed at the valuation date (June 30, 2009, and December 31, 2008, respectively); there are no lapses or withdrawals; mortality according to 100 percent of the Annuity 2000 mortality table; and future claims are discounted in line with the discounting assumption used in the calculation of the SOP reserve averaging between three to four percent. At June 30, 2009, if all of the Companys cedants policyholders covered under GMDB reinsurance agreements were to die immediately, the total claim amount payable by the Company, taking into account all appropriate claims limits, would be approximately $1.3 billion. As a result of the annual claim limits on the GMDB reinsurance agreements, the claims payable are lower in this case than if all the policyholders were to die over time, all else equ

Debt

Debt
	6 Months Ended Jun. 30, 2009
Notes to the Consolidated Financial Statements
Debt	5. DebtThe following table outlines the Companys debt as of June 30, 2009, and December 31, 2008. June 30 December 31 2009 2008 (in millions of U.S. dollars) Short-term debt ACE INA subordinated notes due 2009 $ 200 $ 205 ACE INA term loan due 2009 16 16 Reverse repurchase agreements - 250 $ 216 $ 471 Long-term debt ACE European Holdings due 2010 $ 165 $ 149 ACE INA term loan due 2011 50 50 ACE INA term loan due 2013 450 450 ACE INA senior notes due 2014 499 499 ACE INA senior notes due 2015 446 446 ACE INA senior notes due 2017 500 500 ACE INA senior notes due 2018 300 300 ACE INA senior notes due 2019 500 - ACE INA debentures due 2029 100 100 ACE INA senior notes due 2036 298 298 Other 14 14 $ 3,322 $ 2,806 Trust Preferred Securities ACE INA capital securities due 2030 $ 309 $ 309 a) Short-term debtThe Company has executed reverse repurchase agreements with certain counterparties under which the Company agreed to sell securities and repurchase them at a future date for a predetermined price.At June 30, 2009, all reverse repurchase agreements had been settled.b) ACE INA notesIn June 2009, ACE INA issued $500 million of 5.9 percent senior notes due June 2019. These notes are redeemable at any time at ACE INAs option subject to a make-whole premium plus 0.40 percent. The notes are also redeemable at par plus accrued and unpaid interest in the event of certain changes in tax law. These senior unsecured notes are guaranteed on a senior basis by the Company and they rank equally with all of the Companys other senior obligations. They also contain customary limitations on lien provisions as well as customary events of default provisions which, if breached, could result in the accelerated maturity of such senior debt.

Commitments, contingencies, and

Commitments, contingencies, and guarantees
	6 Months Ended Jun. 30, 2009
Notes to the Consolidated Financial Statements
Commitments, contingencies and guarantees	6. Commitments, contingencies, and guaranteesa) Derivative instrumentsDerivative instruments employedThe Company maintains positions in derivative instruments such as futures, options, swaps, and foreign currency forward contracts for which the primary purposes are to manage duration and foreign currency exposure, yield enhancement, or to obtain an exposure to a particular financial market. Along with convertible bonds and to be announced mortgage-backed securities, discussed below, these are the most numerous and frequent derivative transactions. ACE maintains positions in certain convertible bond investments that contain embedded derivatives. In addition, the Company purchases to be announced mortgage-backed securities (TBA) as part of its investing activities. These securities are included within the Companys fixed maturities available for sale (FM AFS) portfolio.Under reinsurance programs covering living benefit guarantees, the Company assumes the risk of GMIBs associated with variable annuity contracts. The GMIB risk is triggered if, at the time the contract holder elects to convert the accumulated account value to a periodic payment stream (annuitize), the accumulated account value is not sufficient to provide a guaranteed minimum level of monthly income. The Companys GMIB reinsurance product meets the definition of a derivative instrument. Benefit reserves in respect of GMIBs are classified as future policy benefits (FPB) while the fair value derivative adjustment is classified within Accounts payable, accrued expenses, and other liabilities (AP). The Company also maintains positions in certain exchange-traded equity futures contracts and options on equity market futures to limit equity and interest rate exposure in the GMDB and GMIB block of business. In relation to certain long- and short-term debt issues, the Company has entered into interest rate swap transactions for the purpose of either fixing or reducing borrowing costs. ACE buys credit default swaps to mitigate global credit risk exposure, primarily related to reinsurance recoverable.The Company carries all derivative instruments at fair value with changes in fair value recorded in Net realized gains (losses) in the consolidated statements of operations. None of the derivative instruments are used as hedges for accounting purposes. The following table outlines the balance sheet locations, fair values in an asset or (liability) position, and notional values/payment provisions of the Companys derivative instruments at June 30, 2009. June 30, 2009 Consolidated Balance Sheet Location Fair Value Notional Value/ Payment Provision (in millions of U.S. dollars) Investment and embedded derivative instruments Foreign currency forward contracts AP $ (5) $ 315 Futures contracts on money market instruments AP 1 3,165 Futures contracts on notes and bonds AP 9 610 Options on money market instruments AP - 120 Convertible bonds FM AFS 309 580 TBAs FM AFS 171 166 $ 485 $ 4,956 Other derivative instruments Futures contracts on equities AP $ 13 $ 648 Options on equity market futures AP 144 800 Interest rate swaps AP (20) 516

Shareholders' equity

Shareholders' equity
	6 Months Ended Jun. 30, 2009
Notes to the Consolidated Financial Statements
Shareholders' equity disclosure	7. Shareholders equity In connection with the Continuation, the Company changed the currency in which the par value of Ordinary Shares is stated from U.S. dollars to Swiss francs and increased the par value of Ordinary Shares from $0.041666667 to CHF 33.74 (the New Par Value) through a conversion of all issued Ordinary Shares into stock and re-conversion of the stock into Ordinary Shares with a par value equal to the New Par Value (the Par Value Conversion). The Par Value Conversion was followed immediately by a stock dividend, to effectively return shareholders to the number of Ordinary Shares held before the Par Value Conversion. The stock dividend did not therefore have the affect of diluting earnings per share. Upon the effectiveness of the Continuation, the Companys Ordinary Shares became Common Shares. All Common Shares are registered common shares under Swiss corporate law. Notwithstanding the change of the currency in which the par value of Common Shares is stated, the Company continues to use U.S. dollars as its reporting currency for preparing the consolidated financial statements. For purposes of the consolidated financial statements, the increase in par value was accomplished by a corresponding reduction first to retained earnings and second to additional paid-in capital to the extent that the increase in par value exhausted retained earnings at the date of the Continuation. Under Swiss corporate law, dividends, including distributions through a reduction in par value (par value distributions), must be declared by ACE in Swiss francs though dividend payments are made by the Company in U.S. dollars. For the foreseeable future, the Company expects to pay dividends as a repayment of share capital in the form of a reduction in par value or qualified paid-in capital, which would not be subject to Swiss withholding tax. For the three months ended June 30, 2009 and 2008, dividends declared per Common Share amounted to CHF 0.33 ($0.31) and $0.29, respectively. Dividends declared for the six months ended June 30, 2009 and 2008 were CHF 0.63 ($0.57) and $0.56, respectively. The par value distribution in the six months ended June 30, 2009, is reflected as such through Common Shares in the consolidated statement of shareholders equity and had the effect of reducing the par value per Common Share to CHF 32.51. Under Swiss corporate law, the Company may not generally issue Common Shares below their par value. In the event there is a need to raise common equity at a time when the trading price of the Companys Common Shares is below par value, the Company will need to obtain shareholder approval to decrease the par value of the Common Shares.In July 2008, prior to the Continuation, the Company issued and placed 2,000,000 Common Shares in treasury principally for issuance upon the exercise of employee stock options. At June 30, 2009, 1,468,423 Common Shares remain in treasury after net shares redeemed under employee share-based compensation plans.

Share-based compensation

Share-based compensation
	6 Months Ended Jun. 30, 2009
Notes to the Consolidated Financial Statements
Share-based compensation	8. Share-based compensationDuring 2004, the Company established the ACE Limited 2004 Long-Term Incentive Plan (the 2004 LTIP). The Companys 2004 LTIP provides for grants of both incentive and non-qualified stock options principally at an option price per share of 100 percent of the fair value of the Companys Common Shares on the date of grant. Stock options are generally granted with a 3-year vesting period and a 10-year term. The stock options vest in equal annual installments over the respective vesting period, which is also the requisite service period. On February 26, 2009, the Company granted 2,320,620 stock options with a weighted-average grant date fair value of $12.94. The fair value of the options issued is estimated on the date of grant using the Black-Scholes option pricing model.The Companys 2004 LTIP also provides for grants of restricted stock and restricted stock units. The Company generally grants restricted stock and restricted stock units with a 4-year vesting period, based on a graded vesting schedule. The restricted stock is granted at market close price on the day of grant. On February 26, 2009, the Company granted 2,437,525 restricted stock awards and 322,860 restricted stock units to officers of the Company and its subsidiaries with a grant date fair value of $38.51. Each restricted stock unit represents the Companys obligation to deliver to the holder one Common Share upon vesting.

Fair value measurements

Fair value measurements
	6 Months Ended Jun. 30, 2009
Notes to the Consolidated Financial Statements
Fair value measurements	9. Fair value measurementsa) Fair value hierarchyThe Company partially adopted the provisions of FAS 157 on January 1, 2008, and the cumulative effect of adoption resulted in a reduction to retained earnings of $4 million related to an increase in risk margins included in the valuation of certain GMIB contracts. The Company fully adopted the provisions of FAS 157 effective January 1, 2009. FAS 157 defines fair value as the price to sell an asset or transfer a liability in an orderly transaction between market participants and establishes a three-level valuation hierarchy in which inputs into valuation techniques used to measure fair value are classified. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data. Inputs in Level 1 are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 includes inputs other than quoted prices included within Level 1 that are observable for assets or liabilities either directly or indirectly. Level 2 inputs include, among other items, quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability such as interest rates and yield curves. Level 3 inputs are unobservable and reflect managements judgments about assumptions that market participants would use in pricing an asset or liability. A financial instruments categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation measurements used for the Companys financial instruments carried or disclosed at fair value, as well as the general classification of such financial instruments pursuant to the valuation hierarchy.Fixed maturitiesFixed maturities with active markets are classified within Level 1 as fair values are based on quoted market prices. For fixed maturities that trade in less active markets, including most corporate and municipal securities in ACEs portfolio, fair values are based on the output of pricing matrix models, the significant inputs into which include, but are not limited to, yield curves, credit risks and spreads, measures of volatility, and prepayment speeds. These fixed maturities are classified within Level 2. Fixed maturities for which pricing is unobservable are classified within Level 3. Equity securitiesEquity securities with active markets are classified within Level 1 as fair values are based on quoted market prices. For non-public equity securities, fair values are based on market valuations and are classified within Level 2. As previously discussed, during the three months ended June 30, 2009, ACEs investment in AGO was reclassified from Investments in partially-owned insurance companies to Equity securities. The fair value of the Companys investment in AGO is based on a quoted market price and continues to be classified within Level 1. Short-term investmentsShort-term investments, which comprise securities due to mature

Segment information

Segment information
	6 Months Ended Jun. 30, 2009
Notes to the Consolidated Financial Statements
Segment information	10. Segment informationThe Company operates through the following business segments, certain of which represent the aggregation of distinct operating segments: Insurance North American, Insurance Overseas General, Global Reinsurance, and Life. These segments distribute their products through various forms of brokers, agencies, and direct marketing programs. All business segments have established relationships with reinsurance intermediaries. Additionally, Insurance North American has internet distribution channels for some of its products. The Insurance North American segment comprises the PC operation in the U.S., Canada, and Bermuda. This segment includes the operations of ACE USA (including ACE Canada), ACE Westchester, ACE Bermuda, ACE Private Risk Services, and various run-off operations. ACE USA provides a broad array of PC, AH, and risk management products and services to a diverse group of commercial and non-commercial enterprises and consumers. ESIS, ACE USAs in-house third-party claims administrator, performs claims management and risk control services for organizations that self-insure PC exposures. The operating results of ESIS are included in Insurance North Americans administrative expenses. ACE Westchester specializes inthe wholesale distribution of excess, surplus, and specialty PC products. ACE Bermuda provides commercial insurance products on an excess basis to a global client base, covering risks that are generally low in frequency and high in severity. ACE Private Risk Services provides personal lines coverages (such as homeowners and automobile) for high net worth clients. The run-off operations include Brandywine Holdings Corporation, Commercial Insurance Services, residual market workers compensation business, pools and syndicates not attributable to a single business group, and other exited lines of business. Run-off operations do not actively sell insurance products, but are responsible for the management of existing policies and related claims. The Insurance Overseas General segment consists of ACE International (excluding its life insurance business), the wholesale insurance operations of ACE Global Markets, and the international AH and life insurance business of Combined Insurance. ACE International, the ACE INA network of indigenous retail insurance operations, maintains a presence in every major insurance market in the world and is organized geographically along product lines that provide dedicated underwriting focus to customers. ACE Global Markets, the London-based excess and surplus lines business that includes Lloyds Syndicate 2488, offers an extensive product range through its unique parallel distribution of products via ACE European Group Limited (AEGL) and Lloyds Syndicate 2488. ACE provides funds at Lloyds to support underwriting by Syndicate 2488 which is managed by ACE Underwriting Agencies Limited. AEGL, the London-based, Financial Services Authority-U.K. regulated company, underwrites U.K. and Continental Europe insurance and reinsurance business. The reinsurance operation of ACE Global Markets is included in the Global Reinsurance segment. Combined Insurance distributes specialty individual

Earnings per share

Earnings per share
	6 Months Ended Jun. 30, 2009
Notes to the Consolidated Financial Statements
Earnings per share	11. Earnings per shareThe following table sets forth the computation of basic and diluted earnings per share for the periods indicated. The current and prior period calculations have been amended due to the impact of the adoption of FSP EITF 03-6-1. The previously reported amounts for basic earnings per share for the three and six months ended June 30, 2008, were $2.23 and $3.35, respectively. The previously reported amounts for diluted earnings per share for the three and six months ended June 30, 2008, were $2.20 and $3.31, respectively. Three Months Ended Six Months Ended June 30 June 30 2009 2008 2009 2008 (in millions of U.S. dollars, except share and per share data) Numerator: Net Income $ 535 $ 746 $ 1,102 $ 1,123 Dividends on Preferred Shares - (13) - (24) Net income available to holders of Common Shares $ 535 $ 733 $ 1,102 $ 1,099 Denominator: Denominator for basic earnings per share: Weighted average shares outstanding 336,898,236 333,236,903 336,159,387 331,986,638 Denominator for diluted earnings per share: Share-based compensation plans 610,060 2,243,842 342,529 2,172,679 Adjusted weighted average shares outstanding and assumed conversions 337,508,296 335,480,745 336,501,916 334,159,317 Basic earnings per share $ 1.58 $ 2.20 $ 3.28 $ 3.31 Diluted earnings per share $ 1.58 $ 2.18 $ 3.27 $ 3.29 Excluded from adjusted weighted average shares outstanding and assumed conversions is the impact of securities that would have been anti-dilutive during the respective periods. For the three months ended June 30, 2009 and 2008, the potential anti-dilutive share conversions were 1,382,107 and 480,106, respectively. The potential anti-dilutive share conversions for the six months ended June 30, 2009 and 2008, were 1,596,259 and 415,418, respectively.

Information provided in connect

Information provided in connection with outstanding debt of subsidiaries
	6 Months Ended Jun. 30, 2009
Notes to the Consolidated Financial Statements
Information provided in connection with outstanding debt of subsidiaries	12. Information provided in connection with outstanding debt of subsidiaries The following tables present condensed consolidating financial information at June 30, 2009, and December 31, 2008, and for the three and six months ended June 30, 2009 and 2008, for ACE Limited (the Parent Guarantor) and its Subsidiary Issuer, ACE INA Holdings, Inc. The Subsidiary Issuer is an indirect 100 percent-owned subsidiary of the Parent Guarantor. Investments in subsidiaries are accounted for by the Parent Guarantor under the equity method for purposes of the supplemental consolidating presentation. Earnings of subsidiaries are reflected in the Parent Guarantors investment accounts and earnings. The Parent Guarantor fully and unconditionally guarantees certain of the debt of the Subsidiary Issuer. Condensed Consolidating Balance Sheet at June 30, 2009 (in millions of U.S. dollars) ACE Limited (Parent Guarantor) ACE INA Holdings Inc. (Subsidiary Issuer) Other ACE Limited Subsidiaries and Eliminations(1) Consolidating Adjustments(2) ACE Limited Consolidated Assets Investments $ 60 $ 22,440 $ 20,581 $ - $ 43,081 Cash (78) 308 424 - 654 Insurance and reinsurance balances receivable - 3,346 670 - 4,016 Reinsurance recoverable on losses and loss expenses - 16,787 (3,357) - 13,430 Reinsurance recoverable on policy benefits - 715 (367) - 348 Value of business acquired - 793 - - 793 Goodwill and other intangible assets - 3,200 556 - 3,756 Investments in subsidiaries 15,949 - - (15,949) - Due from (to) subsidiaries and affiliates, net 760 (385) 385 (760) - Other assets 14 7,715 1,848 - 9,577 Total assets $ 16,705 $ 54,919 $ 20,740 $ (16,709) $ 75,655 Liabilities Unpaid losses and loss expenses $ - $ 29,356 $ 7,912 $ - $ 37,268 Unearned premiums - 5,444 1,281 - 6,725 Future policy benefits - 2,354 630 - 2,984 Short-term debt - 216 - - 216 Long-term debt - 3,322 - - 3,322 Trust preferred securities - 309 - - 309 Other liabilities 144 6,741 1,385 - 8,270 Total liabilities 144 47,742 11,208 - 59,094 Total shareholders' equity 16,561 7,177 9,532 (16,709) 16,561 Total liabilities and shareholders' equity $ 16,705 $ 54,919 $ 20,740 $ (16,709) $ 75,655 (1)Includes all other subsidiaries of ACE Limited and intercompany eliminations. (2)Includes ACE Limited parent company eliminations. Condensed Consolidating Balance Sheet at December 31, 2008 (in millions of U.S. dollars) ACE Limited (Parent Guarantor) ACE INA Holdings Inc. (Subsidiary Issuer) Other ACE Limited Subsidiaries and Eliminations(1) Consolidating Adjustments(2) ACE Limited Consolidated Assets Investments $ 143 $ 20,323 $ 19,249 $ - $ 39,715 Cash (52) 442 477 - 867 Insurance and reinsurance balances receivable - 2,944 509 - 3,453 Reinsurance recoverable on losses and loss expenses - 16,880 (2,963) - 13,917 Reinsurance recoverable on policy benefits - 625 (366) - 259 Value of business acquired - 8

Document and Entity Information

Document and Entity Information (USD $)
In Millions, except Share data	6 Months Ended Jun. 30, 2009	Jun. 30, 2008
Entity information
Entity registration name	ACE Limited
Entity central index key	0000896159
Document type	10-Q
Document period end date	2009-06-30
Amendment flag	false
Amendment description	N/A
Current fiscal year end date	--12-31
Entity well-known seasoned issuer	Yes
Entity voluntary filers	No
Entity current reporting status	Yes
Entity filer category	Large Accelerated Filer
Entity public float		$18,000
Entity common stock, shares outstanding	336,097,451